O’Toole believes £345m a year grant is safe



New additions to First’s fleet in Lanarkshire


FirstGroup’s discussions with the Department for Transport have indicated that the DfT’s £345m a year Bus Services Operators Grant budget is unlikely to be severely affected by the Treasury’s demands for spending cuts at the DfT.

Instead chief executive Tim O’Toole said that changes to the way BSOG in England is allocated are the most likely outcome when the chancellor outlines the government’s spending plans later this month.

“We have a lot of discussions with the Department on this subject, they are looking at it but I think their focus isn’t so much on reduction as it’s on making sure that it also serves other ends,” O’Toole told City analysts at the presentation of the group’s half year results.

BSOG is a rebate on fuel duty. O’Toole’s expectation is that the DfT will reform the criteria for making payments to incentivise investment in systems to reduce fuel use. O’Toole said First’s current investment programmes in fuel efficiency meant it would not be affected significantly by any reduction in the DfT’s BSOG budget. “We’re in a position to make sure that we continue to receive our fair share of BSOG,” he said.

Former transport minister Norman Baker has meanwhile urged the chancellor to protect BSOG in the forthcoming spending review. In his new role as chairman of Bus Users, Baker said: “The economic and social benefits of the BSOG are considerable and we would urge government to safeguard this vital, yet relatively modest, source of funding.”

Bus Users believes that BSOG’s removal in England would lead to a 10% increase in fares and a 10% reduction in bus services.


This article appears inside the latest issue of Passenger Transport.

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